QAF Limited’s Stock Price Is AT A 52-Week Low Now: Is It Cheap?

QAF Limited  (SGX: Q01) is a food production company. It is involved in bakery operations, pork production, food processing and distribution, feed milling, food trading and distribution, food manufacturing, and wine distribution.

At the current level of S$0.855, QAF’s stock price is at a 52-week low. This raises a question: Is QAF cheap now? This question is important because if the company’s shares are cheap, it might be a good opportunity for investors.

Unfortunately, there is no easy answer. However, we can still get some insight by comparing QAF’s current valuations with the market’s. The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield.

I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

QAF currently has a PB ratio of 0.9, which is lower than the SPDR STI ETF’s PB ratio of 1.14. In addition, the food producer’s dividend yield of 5.8% is significantly higher than the ETF’s yield of 3.0% (The higher a stock’s yield is, the lower is its valuation). But on the other hand, QAF’s PE ratio is more than double that of the SPDR STI ETF’s (23.6 vs 10.6).

When I put it all together, I can see that QAF is priced at a discount to the market given its more attractive PB ratio and dividend yield.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.